Home video sales slump continues

Sales of home video on both DVD and Blu-ray continue to slump. According to reports, the studios were able to generate almost $25 billion in revenue in 2006, and that number sagged to $23.1 billion in 2007, with a fall to just below $22 billion expected for this year.

While Blu-ray has been the victor in the HD war, the impact to bottom line sales has not been what the studios expected, even though shipments of Blu-ray discs are up to 3.8 million so far in 2008, which is on track to be ahead of the 9.8 million total discs shipped in 2007. Still, unlike the transition from VHS to DVD, consumers are not feeling compelled to move to the HD Blu-ray format as most consumers are already happy with how the DVDs look on their sets; and many claim that they don’t see a real difference between the standard 480p DVDs and 1080i/p delivered by Blu-ray.

In addition to obvious marketing issues that need to be addressed regarding Blu-ray, the price of the players still factors in as one of the main issues that people are not upgrading. Currently, standalone Blu-ray players continue to hover at near the $400 mark; while it is expected that the price will fall to $300 before the holiday season, it is obvious that many consumers are still not in a rush to adopt Blu-ray.

Of course, some consumers are more than a little confused about the situation regarding HD all together. Much of the confusion has been driven by the lack of Blu-ray players to support Blu-ray profile 1.1 and 2.0 standards which are going to be necessary to play some of the advanced content on Blu-ray movies that are going to be released in the future. Currently, only the PlayStation 3 continues to be a safe bet if you want at least some reasonable assurance that you will have full Blu-ray profile compatibility moving forward.

Still, others are stinging from the defeat of HD DVD. Many HD DVD consumers jumped into the fray and purchased hundreds, even thousands of dollars in HD DVD hardware and titles, only to find out that HD DVD would not be winning the format war. Many HD DVD owners feel burned, and rightfully so, and while some attempts have been made to deal with disappointed HD DVD owners, it is obvious that many of these owners will not be moving toward buying into Blu-ray for fear that they might get burned again by something like a full Blu-ray profile 2.0.

When you couple these issues with the high cost of Blu-ray titles, production problems with Blu-ray titles, defect rates of Blu-ray titles, and, of course, the lack of production lines available to press Blu-ray titles, it is obvious that it is going to take some additional time before Blu-ray can make an impact toward helping movie studios drive more revenue into their bottom line.

While DVD is clearly not dead, it does not seem to be flying off the shelves at the retail level as it has in the past. Many consumers cite the fact that they don’t want to buy DVDs because they don’t know if they will be moving to Blu-ray in the future. And this has not translated into higher rental numbers, as the rental business has been hit, as well, with a bit of a slump.

We think that while all of these are clearly contributing factors, how about the fact that the number of watchable, quality films in the past couple of years have been limited? The lineup this summer does appear to be delivering some good titles on both DVD and Blu-ray for the upcoming holiday season, so the numbers will hopefully improve by the end of this year.